Further Investigation Without Approval Cannot Sustain Prosecution

The Supreme Court, speaking through Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh, allowed the appeal and quashed the FIR and subsequent proceedings arising from Crime No. 209 of 2006, which had led to CC No. 55623 of 2014 before the 10th Additional Chief Metropolitan Magistrate, Bangalore City.

The case arose from a business relationship between the parties in textile exports. The complainant alleged that the accused had induced investments and then failed to honour their obligations. The accused, on the other hand, maintained that there was no joint venture in the manner alleged and that the dispute was civil in nature.

The record showed that the police had earlier filed two closure reports, both treating the dispute as civil. The first closure report was filed on 17 November 2006. The second was filed on 22 November 2011. The Court noted that the third round of further investigation, which ultimately led to the chargesheet filed on 25 September 2013, had been undertaken without the approval of the concerned Magistrate.

That procedural defect mattered. The Court held that criminal action based on that third round of further investigation was contrary to law and amounted to an abuse of process.

The Court also considered the broader nature of the dispute. It noted that the complainant had earlier pursued civil proceedings in the United States, where the District Court for the Northern District of Illinois entered judgment on 2 February 2004 in favour of Associated Textile Inc. The Supreme Court observed that the complainant’s civil suit in Bangalore was later dismissed on 5 November 2014 because it had been decided ex parte. The Court did not go into the merits of that civil dismissal, but treated the overall controversy as one with a strong civil character.

A further point weighed with the Court. The complainant relied on a handwriting expert’s report to support the allegation of forgery, but that report was dated 1 September 2009, while the foreign court judgment had already been entered on 2 February 2004. The Court said this sequence made the reliance on that report suspect, though it expressly clarified that it was not examining the sanctity of the expert report itself.

In the cumulative view of the circumstances, the Court found that the case fell within ground 3 of paragraph 102 of State of Haryana v. Bhajan Lal. The FIR and all subsequent proceedings were therefore quashed and set aside.

Practical takeaway: where further investigation is carried out without the required Magistrate’s approval, and the dispute is essentially civil, criminal prosecution may not survive quashing.